A booming rental sector is helping to revitalize London’s real estate market, according to a report Thursday from Home.co.uk.

Though the average asking price in Greater London fell 1.6% in September to £515,727 (US$636,536), soaring rental growth—a result of rock-bottom inventory—is tempting investors back into the capital’s lettings market and the predicted wave of investment is going to cause home prices to surge, the online property portal said.

The index is based on asking price data, which means it can provide insight into price movements around five months ahead of mortgage completion and actual sales data.

Rental growth is being led by six London boroughs: Wandsworth, Hackney, Haringey, Hammersmith and Fulham, Southwark and Islington. Though all are showing double-digit rent inflation, for the moment, prices are static, said Doug Shephard, director at Home.co.uk.

“All the top-performing boroughs in the lettings market—in terms of rent growth—will soon translate into the top performing sales markets in London, as increasing numbers of investors spot the opportunity and capitalise on better yielding housing assets,” Mr. Shephard said in the report.

“Sales stock levels in the central London boroughs haven’t been this low for several years and prices look set to surge accordingly as demand picks up,” he said. “Even Brexit pandemonium is not enough to quench the natural re-emergence of vigor in the London property cycle.”

Rental supply has been falling steadily as new taxes and regulations implemented in the lettings sector have made the market less appealing for landlords.

In April 2017, the U.K. began effectively increasing taxes on landlords by phasing out a mortgage interest deduction on buy-to-let properties. The deduction has been lowered by 25% each year since and will be eliminated next year.

The rise came on the heels of a 3% increase to the stamp duty tax for additional and buy-to-let home purchases introduced in 2016.

DISCLAIMER: The currency conversion is provided for illustration purposes only. It is meant only as an approximation based on the latest information available and should not be relied upon for any other purposes. We are not responsible for any loss that you may incur as a result of relying on these currency conversions. All property prices are as stated by the listing agent.

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